Tracking the market and economic trends that shape your finances.

Fees reduced for California's 529 college savings plan

December 1, 2009 | 7:19
pm

Program-management fees for California’s 529 college savings plan, ScholarShare, have been reduced by up to 50%, State Treasurer Bill Lockyer announced today.

The national program differs from state to state. In California, participants can set aside after-tax money in a fund that can be used to pay certain college expenses without incurring state or federal taxes.

Fees for California’s 529s ranged from 0.5% of assets to 1.09%. Under the new plan, which takes effect today, they are reduced to 0.25% to 1.04%. This could save a family with $50,000 in a ScholarShare “direct-sold” index portfolio $125 annually and $1,000 over eight years, Lockyer said in a news release.

Lockyer spokesman Joe DeAnda said, “With these lowered fees, [ScholarShare] is one of the most competitive plans in terms of what you pay in fees on the assets you have.” He added that Colorado recently changed its fee structure, and other states will be changing theirs in the near future.

DeAnda said one of the primary reasons for reducing fees is to make investment plans more attractive for potential investors in this economic environment.

“It’s a tough time for most investors, especially with rising tuition fees every year, so the treasurer’s emphasis was to reduce fees,” DeAnda said.